The Art Detective is a weekly column by Katya Kazakina for Artnet News Pro that lifts the curtain on what’s really going on in the art market.
Last month, around Frieze London, dealers, collectors, and journalists on both sides of the Atlantic seemed to gasp collectively: Luxury goods behemoth LVMH was buying Gagosian gallery!
The megadealer’s representative shot down any possibility of a merger again and again. But the story didn’t go away.
Last week, Kenny Schacter, an artist, collector, and Artnet News columnist, posted a “breaking news!” item on Instagram, claiming that Gagosian, with its 19 branches around the world, had sold to billionaire Bernard Arnault’s LVMH (Louis Vuitton Moët Hennessy). “The commodification of art as just another luxury branded-collectible-fashion accessory is now complete,” he wrote.
Despite the gallery’s rebuttals, the rumor persisted—and mutated. The latest iteration, reported earlier this week by the Canvas and previously floated to me by a well-placed source, is that it’s not an outright acquisition, but rather a credit line of $1 billion (a curiously specific amount that may be predicated on the reported annual turnover of the gallery). Think of it as Larry and Bernard LLC, with Larry drawing down the credit line to make strategic acquisitions, one person told me.
“I would give a line of credit to anyone who can make me money,” the person said. “Why not? There’s nowhere to put it.” Traditional investments have had a rough year, including indices like S&P 500, which is down 22.5 percent in 2022 to date.
Allegedly, the first purchase of the nascent partnership was Warhol’s Shot Sage Blue Marilyn, which Gagosian bought publicly for $195 million at Christie’s in May.
Representatives for Gagosian and LVMH didn’t respond to requests to comment.
A man looks at Andy Warhol’s Shot Sage Blue Marilyn during Christie’s 20th and 21st Century art press preview at Christie’s New York on April 29, 2022 in New York City. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)
“Makes Perfect Sense”
The persistence of these rumors is intriguing. It speaks to the art world’s obsession with Larry Gagosian who, at 77, is peerless in his ability to sell, surprise, and wield power on the global stage. Gagosian’s succession plans—and the future of his empire—remain unclear.
He’s about 20 years older than his rivals David Zwirner, Iwan Wirth, and Marc Glimcher. Unlike Zwirner and Glimcher, who are both second-generation art dealers, Gagosian doesn’t have children. In 2019, he established a 24-person advisory board and hired Andrew Fabricant as the gallery’s chief operating officer, suggesting he was thinking about longer-term planning. But whether Gagosian the brand could outlast its founder remains an open question. Few galleries do.
“Whether or not it’s true, the fact that so many people believe it’s true speaks to the fact that it makes perfect sense,” Natasha Degen, chair of art market studies at the Fashion Institute of Technology, said of the LVMH rumor.
In some ways, a $1 billion credit arrangement is just an accelerated version of business as usual. Businesses big and small borrow all the time—just ask billionaire Sotheby’s owner Patrick Drahi. (It helps that the richer you are, the lower your interest rate.) Gagosian has borrowed consistently over the decades, from Wells Fargo and Bank of America, and used art as collateral for loans from Sotheby’s and Christie’s.
A general view at the “LVxKOONS” exhibition (Louis Vuitton and Jeff Koons Collaboration) at Musee du Louvre on April 11, 2017 in Paris, France. Photo by Bertrand Rindoff Petroff/Getty Images.
He could easily get a credit line from a bank again. But of course, a bank won’t lend $1 billion against a $1 billion business.
“It’s a much shorter distance to the money,” said one person, who knows Gagogian and Arnault. Plus, there’s another component to consider. “This has to do with the games rich and powerful people play. This is about these guys bonding. This will be fun.”
It’s also a strike in Arnault’s arms race against archrival Francois Pinault, a fellow luxury billionaire and owner of Christie’s.
Both Frenchmen have a long history in the art business: Arnault bought Phillips auction house in 1999, merging it the following year with the dealership founded by Simon de Pury and Daniella Luxembourg. (He sold his stake after the tech bubble burst.)
Meanwhile, Pinault has engaged in gallery financing himself. He bought Haunch of Venison gallery, with branches in London, Berlin and New York, in 2007. Six years later, the gallery shuttered.
The Louis Vuitton Foundation in Paris on May 20, 2017. (Photo by Alberto Pezzali/NurPhoto via Getty Images)
Cozy Bedfellows
In a way, Gagosian is already involved with LVMH. Once seen as crass and commercial, collaborations between artists and fashion brands have become commonplace. Gagosian saw the benefits of such partnerships early on.
Gallery artists Jeff Koons, Takashi Murakami, Jonas Wood, Urs Fischer, and Alex Israel have all collaborated with Louis Vuitton. Architect Frank Gehry, who is also represented by the gallery, designed La Fondation Louis Vuitton in Paris.
“There’s a huge amount of overlap in terms of the clientele,” said Degen, whose forthcoming book Merchants of Style explores the convergence of art and fashion. “That makes [Gagosian] a desirable partner.”
LVMH, the world’s largest luxury brand with $56.5 billion in revenue during the first nine months of 2022, has been acquiring other top brands in various segments, including newspapers, luxury hotel chains, and yacht builders.
LVMH’s recent purchase of Tiffany’s resulted in an ad campaign featuring a Basquiat painting. Tiffany’s upcoming holiday season will be anchored by Warhol in a collaboration with the Andy Warhol Foundation, Women’s Wear Daily reported this week.
Beyoncé and Jay-Z with Jean-Michel Basquiat’s Equals pi (1982) for the Tiffany & Co. fall 2021 About Love campaign. Photo by Mason Poole.
“There is a clear focus on not only acquiring companies in the spaces that they have excelled in for so long (i.e. leather & fashion goods predominantly) but also elsewhere,” said Matt Trevors, founder MT Capital Research, whose recent deep dive focused on LVMH. “The company has clearly evolved into a house that is focused on all things luxury.”
Fabriant himself pointed out the inevitable fusion of art and luxury in an interview with WWD in May. “It’s just being accelerated by the consolidation of all these issues, whether it’s Kardashian, Arnault, or the Gagosian gallery having 19 galleries,” he said. “It’s just more, more, more. It’s also mutually beneficial.”
We will likely never know the terms of any deal between the two titans. But it’s easy to imagine that the investment could be used to compete with the auction houses.
Just before the pandemic, Gagosian, Pace, and Acquavella joined forces to win the right to sell the estate of Don Marron, outwitting Christie’s, Sotheby’s, and Phillips, who all jostled for the trove. The trio has not surfaced to take on any other major estates since then. Perhaps a credit line from Arnault would give Gagosian a chance to compete on his own.
Regardless, those who know Gagosian say he’s going to figure out a winning exit strategy.
“This is not the person who just retires,” one former staffer said. “Larry Gagosian isn’t going to go play tennis and enjoy his house in the Hamptons. I can see a Gagosian store at every airport. Larry is the ultimate Warholian art dealer. He’s the king.”